Civil service pension

Fangfoss

If returning to the civil service is there anyway to avoid the Alpha pension scheme?

Dazed_and_C0nfused

Yes.  But why would you want to give up free money and pay more tax than you need to?

NedS

Why would you want to avoid Alpha? It's one of the best DB pension schemes currently available.

hugheskevi

Fangfoss said:

If returning to the civil service is there anyway to avoid the Alpha pension scheme?

Opt-out entirely or switch to the non-contributory Partnership arrangements.

If returning within 5 years and present back in 2012, you may be in-scope of 2015 Remedy Programme and hence return to a pre-2015 scheme (or to be precise, return to alpha but would later be returned to the pre-2015 scheme for service in the Remedy Period, but would then be moved to alpha at the end of the Remedy Period...at which time you could opt-out or switch to Partnership to avoid alpha).

Fangfoss

I don't want to enter onto the alpha pension as I'm going to be part time therefore this will impact on my final salary pension. If I switch to the partnership scheme I want to make sure that it's not attached to the alpha scheme in anyway.

Dazed_and_C0nfused

Do you mean a PCSPS Classic scheme?

If so why do you think being part time is relevant to that?

hugheskevi

Fangfoss said:

I don't want to enter onto the alpha pension as I'm going to be part time therefore this will impact on my final salary pension.

If you are returning after more than 5 years away there would be no impact, as your final salary pension would remain deferred (ie be unaffected by rejoining).

If returning within 5 years, it is your full-time equivalent salary that would be used when your final-salary deferred award is cancelled and re-linked to your salary after rejoining.

If returning with 5 years and your new full-time equivalent salary is lower than your previous salary, the Classic scheme looks at best earnings over last 3 years so you have some time before the lower salary would affect benefits. The other final salary schemes you could have been a member of are the Classic Plus and Premium pension schemes (and theoretically but rather unlikely, the final-salary part of nuvos), and those look back up to 13 years so it isn't much of a concern if you had benefits under either of those schemes.

If I switch to the partnership scheme I want to make sure that it's not attached to the alpha scheme in anyway.

If you switch to Partnership you are a deferred member of the final salary and alpha schemes so there is no impact on final salary. In most regards Partnership is separate to alpha, although the death and ill-health schemes that apply to Partnership are paid out of the alpha scheme - that is mostly for convenience and doesn't have any practical impact on a member.

Bravepants

Presumably what you have accrued in PCSPS Classic is a deferrred final salary pension. Why would that be affected by your joining Alpha? I have nearly 20 years in Premium and that is deferred until NRA of 60, with yearly increases for CPI. I switched to Alpha in 2015 and my Premium pension is not affected by that - I will still get what I have accrued in Premium.

Alpha is a very good pension, it accrues at a faster rate (1/43) than Premium, for example, which accrued at 1/60. Why do people still have a problem with Alpha? Very Odd!

hugheskevi

Bravepants said:

Presumably what you have accrued in PCSPS Classic is a deferrred final salary pension. Why would that be affected by your joining Alpha? I have nearly 20 years in Premium and that is deferred until NRA of 60, with yearly increases for CPI. I switched to Alpha in 2015 and my Premium pension is not affected by that - I will still get what I have accrued in Premium.

Alpha is a very good pension, it accrues at a faster rate (1/43) than Premium, for example, which accrued at 1/60. Why do people still have a problem with Alpha? Very Odd!

Rejoining within 5 years of leaving re-activates a final salary link (for those who would return to alpha) - presumably you left premium some time ago (pre 2015) and rejoined, or had 5+ years out to break final salary link.

Concerns about affecting final salary are often overlooked or misunderstood. However, they are very material. The obvious situation are Classic members who experience a reduction in earnings. Under some circumstances (eg changing to lower grade) there are protections for this, but it could have a material impact on pension.

Under the Classic Plus and Premium schemes, many Civil Servants will have their best final salary measure being based on their service from 13 years ago, which is increased by pension increases. This can commonly be about 10% higher than actual salary where they have not been promoted. Many have no idea that their measure of final salary is reducing as the best measure drops out (it isn't shown on Annual Benefit Statements, which just do calculations based on current salary), and due to salary restraint/freezes that will steadily reduce their pension by a material amount. In some situations, switching to Partnership to preserve a higher past final salary may well be the optimal financial decision.

Whether an individual member is able or has the necessary information to calculate whether this is the case is another matter however - very few will.

Andy_L

Fangfoss said:

I don't want to enter onto the alpha pension as I'm going to be part time therefore this will impact on my final salary pension. If I switch to the partnership scheme I want to make sure that it's not attached to the alpha scheme in anyway.

The final salary calculation is based on the full-time equivalent salary, so re-joining the CS would only impact your FS is the full-time salary is lower than your salary when you left. 

Even if it that is the case (and I think you can "break the link" between previously earnt FS pension & new employment to avoid it) that is independent to joining Alpha or not

Fangfoss

Is taking up the partnership scheme straight forward and would I be able to transfer my two private pensions into it.